Foxconn India may lay off employees

Vidhya Sivaramakrishnan, ET BureauJun 23, 2014, 04.00AM IST

(ET had written about the…)

Foxconn India, recently renamed FIH India, announced to its employees on Friday that it is "considering layoffs/retrenchment", just two days after the company offered a voluntary retirement scheme (VRS) that would be valid till June 20.

ET had written about the company's VRS plans on June 3, 2014 and this is the first time Foxconn is making it official. "Due to the company's continuous fall in business and fall in production and because of the acuteness of the situation and with no other way to manage the situation, the company will take necessary actions in accordance with the law.

Because of having been pushed to this situation, we would like to convey to all the operators that the management is considering to approach the government to opt for layoff/retrenchment options," read the circular that the company put up on the notice board at its facility in Chennai. On the 16th of this month, the management of FIH India had a meeting with the Assistant Commissioner of Labour in Sriperumbudur, the area in which the company is located. "They (FIH India) have given a petition to the government to reduce their workforce by 600 employees.

CITU has objected to it," said S Kannan, district president of Kancheepuram, Centre of Indian Trade Unions (CITU). "We have urged the government not to accept it." Copies of the layoffs/retrenchment announcement and VRS circulars are available with ET.

Foxconn officials could not be reached for comment. In a letter dated May 12, 2014, which is addressed to the Principal Secretary of Tamil Nadu's Labour and Industrial Ministry, a copy of which is also available with ET, the company has said that it is "the main supplier to Nokia" and "in India, our business is substantially dependent on Nokia, Sriperumbudur plant".

Nokia India is cutting down its production and manpower in the plant, which has affected FIH India's operations. "Under these circumstances, we are also compelled to down-size our manpower substantially to suit the current requirements of our customer. Besides this, we also understand that future order status is also uncertain with Nokia given their re-defined business model with Global customer," said the letter.

Nokia India is caught up in a Rs 21,000-crore legal tangle with the Income tax department over non-payments of royalty to its parent firm in Finland, resulting in a freeze of its assets in India including its Chennai factory housed in Nokia SEZ (Special Economic Zone). Nokia is now operating as Microsoft's contract manufacturer and in order to trim its workforce according to its production, it had offered VRS to its employees. Most of them accepted the offer. This has spelt trouble for its vendors including FIH India, which employs around 1,600 employees.

In the circular on VRS, the company has conveyed that all permanent employees would receive a compensation amount of 10 months' salary, a lump sum of Rs 75,000, one month's notice pay, gratuity and earned leaves' salary.

"The management is trying to convince the employees to take up this (voluntary retirement scheme). Mostly, women are opting for this," an employee who did not want to be named told ET. Another employee alleged that Friday's notice on the management exploring layoff/retrenchment options is to force the employees to resign.